The Evidence Is In——-For-Profit College Students Have Huge Debts And Lower Incomes

Go to college, study hard, get a good paying job – that’s the mantra heard by most students across America as they wind down their high school careers.

Intuitively taking out loans just to go to college because everyone says so isn’t a good idea, and a new study by the NBER finds that in fact, students who left for-profit schools during the 2006-2008 timeframe were worse off after attending. A key factor, as the WSJ reports, is that most of these students never earned a degree, they dropped out. Making matters worse, and certainly contributing to the fact that over 40% of student borrowers don’t make payments, is the fact that these students borrowed to attend the colleges.

From the WSJ

The working paper, published this week by the National Bureau of Economic Research, tracks 1.4 million students who left a for-profit school from 2006 through 2008. Because students at these schools tend to be older than recent high-school graduates, they’ve spent time in the workforce. The researchers used Education Department and Internal Revenue Service data to track their earnings before and after they left school.

The result: Students on average were worse off after attending for-profit schools. Undergraduates were less likely to be employed, and earned smaller paychecks–about $600 to $700 per year less–after leaving school compared to their lives before. Those who enrolled in certificate programs made roughly $920 less per year in the six years after school compared to before they enrolled.

The key factor is that most of these students never earned a degree–they dropped out early. Excluding them, the minority of students who earned degrees saw an earnings bump after graduating.

“Certificate, associate’s, and bachelor’s degree students generally experience declines in earnings in the 5 to 6 years after attendance relative to their own earnings in the years before attendance,” write co-authors Stephanie Riegg Cellini of George Washington University and Nicholas Turner of the U.S. Treasury Department.

The picture is even worse when considering most students borrowed to attend the colleges. Nearly 9 out of 10 for-profit school students took on student debt; those in associate’s programs borrowed an average $8,000 and those in bachelor’s programs, $13,000.

“Examining the distribution of average annual earnings effects and average annual debt payments reveals that the vast majority of for-profit students experience both higher debt and lower earnings after attendance, relative to the years before attendance,” the authors write.

The study is being called into question by groups such as The Association of Private Sector Colleges and Universities, saying that the students that were tracked walked right into the Great Recession.

to college, study hard, get a good paying job – that’s the mantra heard by most students across America as they wind down their high school careers.

Intuitively taking out loans just to go to college because everyone says so isn’t a good idea, and a new study by the NBER finds that in fact, students who left for-profit schools during the 2006-2008 timeframe were worse off after attending. A key factor, as the WSJ reports, is that most of these students never earned a degree, they dropped out. Making matters worse, and certainly contributing to the fact that over 40% of student borrowers don’t make payments, is the fact that these students borrowed to attend the colleges.

From the WSJ

The working paper, published this week by the National Bureau of Economic Research, tracks 1.4 million students who left a for-profit school from 2006 through 2008. Because students at these schools tend to be older than recent high-school graduates, they’ve spent time in the workforce. The researchers used Education Department and Internal Revenue Service data to track their earnings before and after they left school.

The result: Students on average were worse off after attending for-profit schools. Undergraduates were less likely to be employed, and earned smaller paychecks–about $600 to $700 per year less–after leaving school compared to their lives before. Those who enrolled in certificate programs made roughly $920 less per year in the six years after school compared to before they enrolled.

The key factor is that most of these students never earned a degree–they dropped out early. Excluding them, the minority of students who earned degrees saw an earnings bump after graduating.

“Certificate, associate’s, and bachelor’s degree students generally experience declines in earnings in the 5 to 6 years after attendance relative to their own earnings in the years before attendance,” write co-authors Stephanie Riegg Cellini of George Washington University and Nicholas Turner of the U.S. Treasury Department.

The picture is even worse when considering most students borrowed to attend the colleges. Nearly 9 out of 10 for-profit school students took on student debt; those in associate’s programs borrowed an average $8,000 and those in bachelor’s programs, $13,000.

“Examining the distribution of average annual earnings effects and average annual debt payments reveals that the vast majority of for-profit students experience both higher debt and lower earnings after attendance, relative to the years before attendance,” the authors write.

The study is being called into question by groups such as The Association of Private Sector Colleges and Universities, saying that the students that were tracked walked right into the Great Recession.